UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________
FORM 10-Q
_____________
(Mark One)
/X/ Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2001.
OR
/ / Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
FOR THE TRANSITION PERIOD FROM____________TO____________.
COMMISSION FILE NUMBER: 0-20850
HAGGAR CORP.
(Exact name of the registrant as specified in the charter)
NEVADA 75-2187001
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
6113 LEMMON AVENUE
DALLAS, TEXAS 75209
(Address of principal executive offices)
TELEPHONE NUMBER (214) 352-8481
(Registrant's telephone number including area code)
Indicate by a check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the 12 months (or for such shorter period
that the registrant was required to file such reports) and (2) has been
subject to such filing requirements for the past 90 days.
Yes /X/ No / /
As of May 11, 2001, there were 6,505,460 shares of the Registrant's
Common Stock outstanding.
HAGGAR CORP. AND SUBSIDIARIES
INDEX
Part I. Financial Information
Item 1. Financial Statements
Consolidated Statements of Operations
(Three and six months ended March 31, 2001 and 2000) 3
Consolidated Balance Sheets
(As of March 31, 2001 and September 30, 2000) 4
Consolidated Statements of Cash Flows
(Six months ended March 31, 2001 and 2000) 5
Notes to Consolidated Financial Statements 6-9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10-13
Item 3. Quantitative and Qualitative Disclosures about
Market Risk 14
Part II. Other Information.
Item 4. Submission of Matters to a Vote of Security
Holders 14
Item 6. Exhibits and Reports on Form 8-K 15
Signature 15
2
HAGGAR CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED, IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Three Months Ended Six Months Ended
March 31, March 31,
------------------- -------------------
2001 2000 2001 2000
-------- -------- -------- --------
Net sales $115,791 $117,068 $215,647 $215,750
Cost of goods sold 80,245 79,242 147,197 143,623
Reorganization Costs 20,800 -- 20,800 --
-------- -------- -------- --------
Gross profit 14,746 37,826 47,650 72,127
Selling, general and administrative expenses (31,298) (33,929) (63,699) (66,883)
Royalty income, net 591 865 1,041 909
-------- -------- -------- --------
Operating income (loss) (15,961) 4,762 (15,008) 6,153
Other income, net 23 13 1 357
Interest expense (1,428) (1,132) (2,397) (1,931)
-------- -------- -------- --------
Income (loss) from operations before provision
(benefit) for income taxes (17,366) 3,643 (17,404) 4,579
Provision (benefit) for income taxes (5,082) 1,461 (4,974) 1,840
-------- -------- -------- --------
Net income (loss) $(12,284) $ 2,182 $(12,430) $ 2,739
======== ======== ======== ========
Net income (loss) per share on a basic basis $ (1.89) $ 0.33 $ (1.91) $ 0.40
======== ======== ======== ========
Net income (loss) per share on a diluted basis $ (1.89) $ 0.31 $ (1.91) $ 0.39
======== ======== ======== ========
Weighted average number of common shares
outstanding--Basic 6,505 6,707 6,516 6,895
======== ======== ======== ========
Weighted average number of common shares and common
share-equivalents outstanding--Diluted 6,505 6,953 6,516 7,076
======== ======== ======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
3
HAGGAR CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
March 31,
2001 September 30,
(unaudited) 2000
----------- -------------
ASSETS
Current assets:
Cash and cash equivalents $ 5,529 $ 6,238
Accounts receivable, net 66,837 66,362
Due from factor 4,058 1,951
Inventories 101,184 92,581
Income tax receivable 7,021 --
Deferred tax benefit 10,066 10,624
Other current assets 2,005 1,737
-------- --------
Total current assets 196,700 179,493
Property, plant, and equipment, net 52,393 59,563
Goodwill, net 25,814 26,505
Other assets 6,922 6,795
-------- --------
Total assets $281,829 $272,356
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 24,390 $ 25,176
Accrued liabilities 31,040 22,970
Accrued wages and other employee compensation 1,757 6,106
Accrued workers' compensation 3,244 3,941
Current portion of long-term debt 3,928 4,046
-------- --------
Total current liabilities 64,359 62,239
Long-term debt 67,652 46,333
-------- --------
Total liabilities 132,011 108,572
Commitments and contingencies
Stockholders' equity:
Common stock--par value $0.10 per share; 25,000,000
shares authorized and 8,588,665 and 8,582,998
shares issued at March 31, 2001 and September 30,
2000, respectively 858 858
Additional paid-in capital 41,993 41,931
Cumulative translation adjustment (913) (565)
Retained earnings 131,161 144,287
-------- --------
173,099 186,511
Less--Treasury stock, 2,083,205 and 2,043,205 shares at cost
at March 31, 2001 and September 30, 2000, respectively (23,281) (22,727)
-------- --------
Total stockholders' equity 149,818 163,784
-------- --------
Total liabilities and stockholders' equity $281,829 $272,356
======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
4
HAGGAR CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED, IN THOUSANDS)
Six Months Ended
March 31,
-------------------
2001 2000
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $(12,430) $ 2,739
Adjustments to reconcile net income (loss) to net cash used
in operating activities:
Depreciation and amortization 6,572 6,677
(Gain) loss on disposal of property, plant, and
equipment 3,125 (524)
Changes in assets and liabilities:
Accounts receivable, net (475) (3,405)
Due from factor (2,107) 553
Inventories (8,603) 4,798
Federal income tax receivable (7,021) --
Current deferred tax benefit 558 296
Other current assets (268) (1,281)
Accounts payable (786) (9,727)
Accrued liabilities 8,070 (4,647)
Accrued wages, workers' compensation, and other
employee benefits (5,046) (4,515)
------- -------
Net cash used in operating activities (18,411) (9,036)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment, net (1,869) (5,258)
Proceeds from the sale of property, plant and equipment, net 33 1,199
(Increase) decrease in other assets (127) 156
------- -------
Net cash used in investing activities (1,963) (3,903)
CASH FLOWS FROM FINANCING ACTIVITIES
Purchase of treasury stock at cost (554) (7,747)
Proceeds from issuance of long-term debt 63,000 99,000
Payments on long-term debt (41,799) (76,813)
Proceeds from issuance of common stock 62 5
Payments of cash dividends (696) (672)
------- -------
Net cash provided by financing activities 20,013 13,773
Effects of exchange rates on cash and cash equivalents (348) --
Increase (decrease) in cash and cash equivalents (709) 834
Cash and cash equivalents, beginning of period 6,238 6,380
------- -------
Cash and cash equivalents, end of period $ 5,529 $ 7,214
======= =======
Supplemental disclosure of cash flow information
Cash paid for:
Interest $ 3,217 $ 1,767
Income taxes $ 4,105 $ 5,134
The accompanying notes are an integral part of these consolidated financial
statements.
5
HAGGAR CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED FINANCIAL STATEMENTS
The consolidated balance sheet as of March 31, 2001, and the consolidated
statements of operations and cash flows for the three and six months ended
March 31, 2001, have been prepared by Haggar Corp. (the "Company") without
audit. In the opinion of management, all necessary adjustments (which include
only normal recurring adjustments) to present fairly the consolidated financial
position, results of operations, and cash flows of the Company at March 31,
2001, and for all other periods presented, have been made. Certain information
and footnote disclosures normally included in the financial statements prepared
in accordance with generally accepted accounting principles have been omitted.
These financial statements should be read in conjunction with the financial
statements and accompanying footnotes in the Company's Annual Report on
Form 10-K for the year ended September 30, 2000.
CONCENTRATIONS OF CREDIT RISK
Financial instruments which potentially expose the Company to concentrations of
credit risk, as defined by Statement of Financial Accounting Standards ("SFAS")
No. 105, "Disclosure of Information about Financial Instruments with Off-Balance
Sheet Risk and Financial Instruments with Concentrations of Credit Risk,"
consist primarily of trade accounts receivable. The Company's customers are not
concentrated in any specific geographic region but are concentrated in the
apparel industry. The Company's largest current customer, J.C. Penney
Company, Inc., accounted for 24.8% and 24.5% of the Company's net sales for the
six months ended March 31, 2001 and 2000, respectively. The Company's second
largest current customer, Kohl's Department Stores, Inc., accounted for 13.4%
and 12.0% of the Company's net sales for the six months ended March 31, 2001 and
2000, respectively. No other customer accounted for more than 10% of the
Company's net sales. The Company performs ongoing credit evaluations of its
customers' financial condition and establishes an allowance for doubtful
accounts based upon factors surrounding the credit risk of specific customers,
historical trends, and other information.
INVENTORIES
Inventories are stated at the lower of cost (first-in, first-out) or market and
consisted of the following at March 31, 2001, and September 30, 2000 (in
thousands):
March 31, September 30,
2001 2000
--------- -------------
Piece goods $ 10,443 $12,675
Trimmings & supplies 3,595 3,017
Work-in-process 15,131 17,955
Finished garments 72,015 58,934
-------- -------
$101,184 $92,581
======== =======
Work-in-process and finished garments inventories consisted of materials, labor
and manufacturing overhead.
6
LONG-TERM DEBT
Long-term debt consisted of the following at March 31, 2001, and September 30,
2000 (in thousands):
March 31, September 30,
2001 2000
--------- -------------
Borrowings under revolving credit line $54,000 $29,000
Industrial Development Revenue
Bonds with interest at a rate equal to that of
high-quality, short-term, tax-exempt obligations, as
defined (3.65% at March 31, 2000 and September 30,
2000), payable in annual installments of $100 to $200,
and a final payment of $2,000 in 2005, secured by
certain buildings and equipment 2,400 2,500
Allstate Notes 14,286 17,857
Other 894 1,022
------- -------
71,580 50,379
Less--Current portion 3,928 4,046
------- -------
$67,652 $46,333
======= =======
Net assets mortgaged or subject to lien under the Industrial Development Revenue
Bonds totaled approximately $733,776 at March 31, 2001.
As of March 31, 2001, the Company had a revolving credit line agreement (the
"Agreement") with certain banks. As of March 31, 2001, the Company had
additional available borrowing capacity of approximately $37.4 million. The
Company incurred approximately $55,146 in commitment fees related to the
available borrowing capacity for the six month period ended March 31, 2001. The
interest rates for the six-month period ended March 31, 2001, ranged from 6.8%
to 9.5%. The Agreement prohibits the Company from pledging its accounts
receivable and inventories, contains limitations on incurring additional
indebtedness, requires maintaining minimum net worth levels of the Company and
the Company's main operating subsidiary, and also requires the maintenance of
certain financial ratios.
On May 11, 2001, the Company amended the Agreement to extend the maturity date
one year to June 30, 2003, with a one year renewal at the option of the banks,
and to revise certain covenants. The amendment also reduces the Agreement to a
$90.0 million facility which may be increased up to a maximum of a
$100.0 million facility by the addition of new banks to the lending group.
7
REORGANIZATION
On March 26, 2001, the Company announced plans to close its manufacturing
facility in Edinburg, Texas, and its operations in Japan. Accordingly, the
Company recorded a $20.8 million charge to operations ($14.3 million after
taxes) in the quarter ending March 31, 2001. The Company's decision to close its
Edinburg facility was made in conjunction with the Company's continuing strategy
to source its production internationally. All 595 employees at the Edinburg
plant will be terminated as a result of the closure, which is expected to
be completed by June 30, 2001. Severance payments of $3.5 million are expected
to be made by June 30, 2001, and $4.6 million of other employee related
costs, including medical benefits and workers' compensation, are expected to
be paid by the end of fiscal 2002. The net book value of the Edinburg
manufacturing facility and equipment was written off as the net realizable
value of such assets was expected to be insignificant.
Due to unfavorable retail conditions in Japan, the Company decided to terminate
its operations in Japan, which is expected to be completed by the end of the
fourth quarter of fiscal 2001. Severance costs related to the closure are
expected to be insignificant and reserves necessary to writedown the operation's
receivables and inventory to fair market value were approximately $1.0 million.
During the second quarter of fiscal 2001, the Company recorded an $8.6 million
charge for legal expenses, of which $1.6 million was due to a cash settlement
for certain claims and the remaining $7.0 million was due to management's
estimate of the expected loss for unsettled claims against the Company,
including two jury verdicts totaling $5.2 million which have been returned
against subsidiaries of the Company and are currently on appeal.
The majority of the legal claims against the Company relate to claims for
wrongful discharge and common law tort by former employees of the Company's
sewing facilities in South Texas that were closed in previous years. Due to the
closure of the Company's last manufacturing facility in South Texas, management
believes that the likelihood of adverse outcomes related to such claims has
increased significantly. Accordingly, the Company has recorded its best estimate
of future costs for such claims.
The reorganization costs are summarized as follows (in millions):
Employee termination and related costs $ 8.1
Plant and equipment impairment 3.1
Other asset write-downs 1.0
Legal costs 8.6
-----
Total Reorganization Costs $20.8
=====
8
NET INCOME PER COMMON SHARE--BASIC AND DILUTED
Basic earnings per share excludes dilution and is computed by dividing net
income by the weighted-average number of common shares outstanding for the
period. Diluted earnings per share is computed by dividing net income by the sum
of the weighted-average number of common shares outstanding for the period and
the number of equivalent shares assumed outstanding under the Company's stock
based compensation plans.
Options to purchase 832,865 and 826,865 common shares at prices ranging from
$12.12 to $23.00 were not dilutive due to the loss recorded by the Company and
were outstanding for the three and six months ended March 31, 2001. Options to
purchase 983,231 and 765,500 common shares at prices ranging from $12.80 to
$23.00 were not dilutive and were outstanding for the three and six months ended
March 31, 2000. Such shares for the fiscal 2000 periods were not included in the
diluted earnings per share calculation because the options' exercise prices were
greater than the average market price of the common shares. Diluted earnings per
share was calculated as follows (in thousands, except per share data):
Three Months Ended Six Months Ended
March 31, March 31,
------------------- -------------------
2001 2000 2001 2000
-------- -------- -------- --------
Net income (loss) to common stockholders $(12,284) $ 2,182 $(12,430) $ 2,739
Weighted average common shares outstanding 6,505 6,707 6,516 6,895
Shares equivalents, due to stock options -- 246 181 --
-------- -------- -------- --------
6,505 6,953 6,516 7,076
======== ======== ======== ========
Net income per share--Diluted $ (1.89) $ 0.31 $ (1.91) $ 0.39
SUBSEQUENT EVENTS
DIVIDEND DECLARED.
The Company declared a cash dividend of $0.05 per share payable to the
stockholders of record on May 7, 2001. The dividend of approximately $360,000
will be paid on or before May 21, 2001.
9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in conjunction with the attached
consolidated financial statements and the notes thereto and with the Company's
Annual Report on Form 10-K for the fiscal year ended September 30, 2000.
RESULTS OF OPERATIONS
REORGANIZATION
On March 26, 2001, the Company announced plans to close its manufacturing
facility in Edinburg, Texas, and its operations in Japan. Accordingly, the
Company recorded a $20.8 million charge to operations ($14.3 million after
taxes) in the quarter ending March 31, 2001. The Company's decision to close its
Edinburg facility was made in conjunction with the Company's continuing strategy
to source its production internationally. All 595 employees at the Edinburg
plant will be terminated as a result of the closure, which is expected to
be completed by June 30, 2001. Severance payments of $3.5 million are expected
to be made by June 30, 2001, and $4.6 million of other employee related
costs, including medical benefits and workers' compensation, are expected to
be paid by the end of fiscal 2002. The net book value of the Edinburg
manufacturing facility and equipment was written off as the net realizable
value of such assets was expected to be insignificant.
Due to unfavorable retail conditions in Japan, the Company decided to terminate
its operations in Japan, which is expected to be completed by the end of the
fourth quarter of fiscal 2001. Severance costs related to the closure are
expected to be insignificant and reserves necessary to writedown the operation's
receivables and inventory to fair market value were approximately $1.0 million.
During the second quarter of fiscal 2001, the Company recorded an $8.6 million
charge for legal expenses, of which $1.6 million was due to a cash settlement
for certain claims and the remaining $7.0 million was due to management's
estimate of the expected loss for unsettled claims against the Company,
including two jury verdicts totaling $5.2 million which have been returned
against subsidiaries of the Company and are currently on appeal.
The majority of the legal claims against the Company relate to claims for
wrongful discharge and common law tort by former employees of the Company's
sewing facilities in South Texas that were closed in previous years. Due to the
closure of the Company's last manufacturing facility in South Texas, management
believes that the likelihood of adverse outcomes related to such claims has
increased significantly. Accordingly, the Company has recorded its best estimate
of future costs for such claims.
The reorganization costs are summarized as follows (in millions):
Employee termination and related costs $ 8.1
Plant and equipment impairment 3.1
Other asset write-downs 1.0
Legal costs 8.6
-----
Total Reorganization Costs $20.8
=====
The impact of the reorganization on the Company will be an annual pre-tax cost
savings of $3 to $5 million depending on the mix of our products and future
sourcing efforts.
10
OPERATIONS
The Company's second quarter of fiscal 2001 net loss of $12.3 million compares
to net income of $2.2 million in the second quarter of fiscal 2000. The net loss
to common stockholders for the six months ended March 31, 2001, was
$12.4 million compared to net income of $2.7 million for the six months ended
March 31, 2000. The decreases in net income for the three and six months period
ended March 31, 2001, relate principally to the reorganization of the Company's
manufacturing operations.
Net sales for the quarter ended March 31, 2001, decreased 1.1% to
$115.8 million from $117.1 million for the second quarter of fiscal 2000. The
decrease in net sales for the second quarter of fiscal 2001 is the combined
result of a 6.0% increase in unit sales and a 7.1% decrease in the average sales
price. Net sales of $215.6 million for the six months ended March 31, 2001, were
flat as compared to the prior fiscal year.
Gross profit for the quarter and six months ended March 31, 2001 decreased by
$23.1 million and $24.5 million, respectively, from the corresponding periods
in fiscal 2000 primarily due to the reorganization charge.
Before the reorganization charge, gross profit as a percentage of net sales
decreased to 30.7% in the second quarter of fiscal 2001 as compared to 32.3% in
the second quarter of the prior fiscal year. Gross profit before the
reorganization charge for the first six months of fiscal 2001 decreased to 31.7%
compared to 33.4% in the first six months of fiscal 2000. The decreases in gross
profit before the reorganization charge are primarily the result of more
competitive customer pricing as a result of a tough retail environment.
Selling, general and administrative expenses as a percentage of net sales
decreased to 27.0% for the three month period ended March 31, 2001, as compared
to 29.0% for the same period ended March 31, 2000. Actual selling, general and
administrative expenses decreased to $31.3 million in the second quarter of
fiscal 2001 compared to $33.9 million in the same quarter in fiscal 2000. The
$2.6 million decrease in selling, general and administrative expenses for the
second quarter of fiscal 2001 compared to the second quarter of fiscal 2000
relates to a $1.5 million decrease in selling and advertising expenses, a
$0.3 million decrease in women's division expenses, and a $1.1 million decrease
in licensing expenses. The decreases are offset by a $0.3 million increase in
shipping expenses.
Selling, general and administrative expenses as a percentage of net sales
decreased to 29.5% for the six month period ended March 31, 2001, as compared to
31.0% for the same period ended March 31, 2000. Actual selling, general and
administrative expenses decreased to $63.7 million for the six months ended
March 31, 2001, compared to $66.9 million in the first six months of the prior
fiscal year. The decrease of $3.2 million in selling, general and administrative
expenses for the first six months of fiscal 2001 compared to fiscal 2000
primarily related to the following: a $1.5 million decrease in selling and
advertising expenses, a $0.7 million decrease in licensing expenses, and a
$0.8 million decrease in women's division expenses.
Other income was $23,000 in the second quarter of fiscal 2001 compared to
$13,000 in the same quarter last year. For the first six months of fiscal 2001,
other income decreased to $1,000 compared to $357,000 for the same period last
year, mainly related to fewer sales of miscellaneous equipment in fiscal 2001.
In the second quarter of fiscal 2001, the provision (benefit) for income taxes
as a percentage of income before taxes was (29.3%) compared to 40.1% for the
same quarter last year. For the six months ended March 31, 2001, the provision
(benefit) for income taxes as a percentage of income before taxes was (28.6%)
compared to 40.2% for the same period last year. The effective tax rates differ
from the federal statutory rate primarily due to foreign and state taxes and
non-deductible goodwill.
11
LIQUIDITY AND CAPITAL RESOURCES
The Company's trade accounts receivable potentially expose the Company to
concentrations of credit risk because most of its customers are in the retail
apparel industry. The Company performs ongoing credit evaluations of its
customers' financial condition and establishes an allowance for doubtful
accounts based upon the factors related to the credit risk of specific
customers, historical trends and other information. The Company's trade accounts
receivable, including amounts due from the factor, increased approximately
$2.6 million to $70.9 million at March 31, 2001, from $68.3 million at
September 30, 2000. This increase is primarily the result of seasonal increases
in sales.
Inventories as of March 31, 2001, increased to $101.2 million from
$92.6 million at September 30, 2000. The increase in inventory levels is due to
an increase in finished goods in anticipation of higher sales and the result of
increased domestic production due to the sourcing reorganization announced in
March 2001.
The Company has a revolving credit line facility with certain banks. As of
March 31, 2001, the Company had additional available borrowing capacity of
approximately $37.4 million. The Company incurred approximately $55,146 in
commitment fees related to the available borrowing capacity for the six months
ended March 31, 2001. The interest rates for the quarter ended March 31, 2001,
ranged from 6.8% to 9.5%.
On May 11, 2001, the Company amended the Agreement to extend the maturity date
one year to June 30, 2003, with a one year renewal at the option of the banks,
and to revise certain covenants. The amendment also reduces the Agreement to a
$90.0 million facility which may be increased up to a maximum of a
$100.0 million facility by the addition of new banks to the lending group.
For the six months ended March 31, 2001, the Company used cash in operating
activities of approximately $18.4 million. The cash used is primarily the result
of the $12.4 million net loss, a $2.1 million increase in due from factor, a
$7.0 million increase in federal income tax receivable, and an $8.6 million
increase in inventories. For the same period last year, the Company used cash in
operating activities of $9.0 million which was primarily the result of a
$3.4 million increase in accounts receivable and a $9.7 million decrease in
accounts payable, offset by a $4.8 million decrease in inventories
The Company used approximately $2.0 million in investing activities for the six
months ended March 31, 2001, primarily due to purchases of property, plant and
equipment of $1.9 million. For the six months ended March 31, 2000, the Company
used approximately $3.9 million in investing activities. The Company purchased
property, plant and equipment of $5.3 million, which was offset by proceeds from
the sale of property, plant and equipment of $1.2 million.
Cash flows provided from financing activities of $20.0 million for the six
months ended March 31, 2001, were primarily the result of a net increase in
long-term debt of $21.2 million. Comparatively, cash flows provided from
financing activities of $13.8 million for the same period last year were
primarily the result of a net increase in long-term debt of $22.2 million,
offset by the purchase of $7.7 million in treasury stock.
The Company believes that the cash flow generated from operations and the funds
available under the aforementioned credit facilities will be adequate to meet
its working capital and related financing needs for the foreseeable future.
12
FORWARD LOOKING STATEMENTS.
This report contains certain forward-looking statements. In addition, from time
to time the Company may issue press releases and other written communications,
and representatives of the Company may make oral statements, which contain
forward-looking information. Except for historical information, matters
discussed in such oral and written communications are forward-looking statements
that involve risks and uncertainties, which could cause actual results to differ
materially from those in such forward-looking statements.
Although the Company believes that any forward-looking statements are based on
reasonable assumptions, it can give no assurance that its expectations will in
fact occur and cautions that actual results may differ materially from those in
any forward-looking statements. A number of factors could affect the results of
the Company or the apparel industry generally and could cause the Company's
expected results to differ materially from those expressed in this filing. These
factors include, among other things:
- Changes in general business conditions,
- Impact of competition in the apparel industry,
- Changes in the performance of the retail sector in general and the apparel
industry in particular,
- Seasonality of the Company's business,
- Changes in consumer acceptance of new products and the success of
advertising, marketing and promotional campaigns,
- Changes in laws and other regulatory actions,
- Changes in labor relations,
- Political and economic events and conditions domestically or in the
foreign jurisdictions in which the Company operates,
- Unexpected judicial decisions,
- Changes in interest rates and capital market conditions,
- Inflation,
- Acquisition or dissolution of business enterprises,
- Natural disasters, and
- Unusual or infrequent items that cannot be foreseen or are not susceptible
to estimation.
SUBSEQUENT EVENTS
DIVIDEND DECLARED.
The Company declared a cash dividend of $0.05 per share payable to the
stockholders of record on May 7, 2001. The dividend of approximately $360,000
will be paid on or before May 21, 2001.
13
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The Company is exposed to market risk from changes in interest rates, which may
adversely affect its financial position, results of operations and cash flows.
In seeking to minimize the risks from interest rate fluctuations, the Company
manages exposures through its regular operating and financing activities. The
Company does not use financial instruments for trading or other speculative
purposes and is not party to any derivative financial instruments. The Company
is exposed to interest rate risk primarily through its borrowing activities. As
of March 31, 2001, the Company had $54.0 million outstanding under its revolving
credit line agreement and $16.7 million in senior notes payable. See Item
1.--Notes to Consolidated Financial Statements--Long-term Debt for additional
discussion of the terms of the Company's credit facility and the senior notes
payable. The fair values of the borrowings under the revolving credit line and
the senior notes approximate the carrying values of the respective obligations.
PART II. OTHER INFORMATION.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company's Annual Meeting of Stockholders was held on February 7, 2001. At
such meeting, J.M. Haggar III and Richard W. Heath were elected to serve as
Class II directors of the company for a three year term and until their
respective successors are elected and qualified. Of the 5,780,133 shares
represented at the meeting in person or by proxy, Mr. Haggar III and Mr. Heath
received 4,971,128 and 5,163,230 votes, respectively, for their election as
Class II directors. The other directors whose term of office continued after the
meeting are as follows: Frank D. Bracken, Norman E. Brinker, Rae F. Evans and
John C. Tolleson.
The appointment of Arthur Andersen LLP as auditors for the 2001 fiscal year was
ratified with 5,770,639 shares voted for, 3,041 shares voted against, no broker
non-votes and 6,453 shares abstained.
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Form 8-K's were filed on January 11, 2001, and May 2, 2001, disclosing
the Company's revised projections under Item 9. An additional Form 8-K
was filed on March 26, 2001, disclosing the Company's announcement of the
reorganization charge for closing its last domestic sewing facility and
the effect on the Company's projections pursuant to Items 5, 7, and 9.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Haggar Corp.,
Date: May 11, 2001 By: /s/ David M. Tehle
------------------------------------
David M. Tehle
Executive Vice President,
Secretary and Chief
Financial Officer
Signed on behalf of the
registrant and as principal
financial officer.
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